Which of the Following Statements Is FALSE

question 2

Multiple Choice

Which of the following statements is FALSE?

• A)Leverage can reduce the degree of managerial entrenchment because managers are more likely to be fired when a firm faces financial distress.
• B)When a firm is highly levered,creditors themselves will closely monitor the actions of managers,providing an additional layer of management oversight.
• C)According to the empire building hypothesis,leverage increases firm value because it commits the firm to making future interest payments,thereby reducing excess cash flows and wasteful investment by managers.
• D)Managers of large firms tend to earn higher salaries,and they may also have more prestige and garner greater publicity than managers of small firms.As a result,managers may expand (or fail to shut down)unprofitable divisions,pay too much for acquisitions,make unnecessary capital expenditures,or hire unnecessary employees.

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Definitions:

Anxiety

A feeling of worry, nervousness, or unease about something with an uncertain outcome.

Baseline Physical Condition

An individual's state of physical health and capability before undergoing treatment, exercise, or a health intervention.

Environmental Influence

The impact that surroundings, including social, natural, and built environments, have on an individual's health and behaviors.

Fingerstick Glucose Testing

A method of monitoring blood glucose levels by obtaining a small blood sample from the fingertip.